Speaker Smith, President Pro Tempore
Scarnati, Republican Leaders Pileggi and Turzai, Democrat Leaders Costa and
Dermody, Lieutenant Govern​​​or Cawley, members of the General Assembly, the best
First Lady in the country Susan Corbett, members of my cabinet, friends and
fellow citizens:

Thank you all very much.

This is the fourth time I have come here to
present a budget to the general assembly, and it’s always a privilege. Today,
I’ve brought along some special guests.

They represent the men and women of this
state who wear the uniform of our country, and the many who have served in
theaters of war. This past year, the 104th Attack Reconnaissance Battalion, a
unit of the Pennsylvania National Guard, completed a deployment in Afghanistan.
Our guests are among the brave and highly skilled Apache helicopter pilots who
carried out that mission. We are proud to have the Apaches based in
Pennsylvania.

Recently though, the Army announced a plan
to take many of these helicopters with their pilots out of Pennsylvania.

Along with Adjutant General Wesley Craig, I
am going to fight to keep them here.

As a former member of the 28th AVBN,
Pennsylvania National Guard, the pride I have for our pilots runs deep. Please
welcome Major Randy Lutz and Chief Warrant Officer Joshua Soper.

We’ve done a lot of good work, you and I,
in building a stronger Pennsylvania.

I thank each member here for serving this commonwealth
with energy and conviction. I’ve tried
to do the same, because our challenges have required nothing less.

Not so long ago, Pennsylvania was in pretty
serious trouble, and there was no easy way out. We took some of the worst hits
of the great recession.

Things were especially tough in many of our
rural counties, places where economic stagnation had already seemed like a fact
of life.

All of this was our starting point, and we
have a lot to show for three years of hard choices and honest effort.

Of course, the good things we have seen
since then are hardly the doing of government alone. So, right up front, let’s
give credit for Pennsylvania’s comeback where it belongs, to the people of
Pennsylvania.

For our part, we set out to revive the
economy of this state, with sound budgeting and spending discipline. I have
submitted, and you have passed, three balanced budgets – on time.

We addressed our state’s fiscal problems by
eliminating the deficit, and without adding to the fiscal problems of our
citizens by raising their taxes.

Sometimes in government, nothing makes a
difference like defining a promise kept.

And with your support, we have not raised
taxes in three years.

In that and other ways, we are doing things
right, the signs of revival are clear to see. Pennsylvanians are finding jobs
again, in Pennsylvania.

Today our labor force is 6 million strong and growing. In three years,
our commonwealth has added enough jobs to replace nearly all we lost in the
downturn.

At its peak, unemployment in our state was
9.2 percent, now it is 6.9 percent,

a five year low. That demonstrates progress.

Better still, the economists say conditions
are right for more job growth this coming year and well beyond. The PEW
Research Center estimates that number to grow by another 76,000 this year
alone.

Why? Because we are building a stronger
Pennsylvania.

Every city is the heart of a region, and as
a city is stronger, so too is that region. We’re seeing that today in
Philadelphia, Pittsburgh, and right here in Harrisburg – a city finally on its
way to financial recovery.

A few short years ago our capital city's
future was bleak. But this General Assembly
acted, establishing the Office of the Receiver. Our commonwealth team, lead by
General William Lynch, has put Harrisburg on a path to a better, brighter
future.

Please join me in thanking General Lynch.

In so many cases, too, we’re seeing expansion
of the best kind, into industries that have a good future ahead of them. Ten or 15 years ago, few would have guessed

that Pittsburgh would become a leader in
biotech or high technology. Well, today it is a leader in both. When Google
completes that new building in Pittsburgh this year, it’ll be their second.

The entertainment technology industry that
many think California has the market on, is on the move in Pennsylvania
too. Just a few weeks ago, I was in
Philadelphia when Comcast announced a 1.2 billion-dollar plan to build an
innovation and technology center.

When major companies make investments on
that scale, they look for cities on the rise, and in this case, they called it
right.

Why?
Because we are building a stronger Pennsylvania.

Energy

In the space of a few years, our state has
also become the nation’s second-largest producer of natural gas. Shale gas
offers our country a chance at energy independence and greater economic
security – and it’s part of the all-of-the-above strategy we’ve put in place.
Our state is energy-rich, and we need to harness all our resources – coal,
wind, solar, nuclear, hydro and gas.

We are very fortunate, and we can be very
proud, that the shale-gas revolution is happening right here in
Pennsylvania. Go to Williamsport, and
you won’t doubt the difference that this industry is making for our state. Talk to our local businesses – the dry
cleaner and the diner owner - who are remaking Main Street. Talk to the folks
at Allison Crane, NuWeld and Albert’s Spray Solutions. These companies are seizing this opportunity,
hiring local citizens for jobs, and helping to maximize our energy resources -
responsibly.

Shale gas has made that region one of the
top ten fastest-growing local economies in the country. It’s lifting up entire
communities, creating and supporting many thousands of jobs well beyond gas
production. The revival extends to manufacturing, as leading companies put
Pennsylvania back on the map for investment and growth.

And it’s reducing home energy costs, right
now, for Pennsylvanians.

Big things are in motion, and shale gas is
the power behind it all. It’s great for Pennsylvania, and even greater for the
United States.

And we were smart enough to welcome that
industry, and all those jobs, by working together with local governments,
industry and environmental organizations…to craft a responsible impact fee
that, by April will have generated more than $600 million in less than three
years to benefit every single community in this commonwealth. It’s very simple:
Energy equals jobs.

And I thank you for working with me to grow
this industry for the people of Pennsylvania, and to deliver energy to the rest
of the world.

Transportation

For years, this state needed a sustained,
large-scale investment in transportation.
And somehow it just never got done. We did things a little differently,
and we got a different result.
Republican and Democrat. Labor
and Industry. We all worked together to
put the funding crisis behind us and do what is right for the people of
Pennsylvania.

The construction season coming up will give
us just a glimpse of the benefits. And far into the future, Pennsylvania will
have the good roads, safe bridges, and reliable public transit that our people
expect and deserve.

We have accomplished this and more, because,
in our debates, we haven’t let “NO”
be anyone’s final answer. We stay at it, until the work is done. You
could call this the practical way of governing. You could call it the
bipartisan way. I like to think of it as the Pennsylvania way, defined at its
best by honesty, fair dealing, and the shared values of the people we serve.

Reform

This being an election year, I suppose it’s
in the realm of possibility that a few disagreements might come into the
picture again. It could
happen. But so far

as the budget of this commonwealth is
concerned, our business is in the here and now.

This budget represents how we have worked
together to build a stronger Pennsylvania. Because it's not about how much we
spend, it's about how we invest precious tax dollars back into the people of
Pennsylvania and our commonwealth's future.

We must be good stewards and ensure that
every dollar we invest in this budget has a purpose. We must continue to push
the boundaries of reform, and make our state government more effective in the
use of tax dollars.

Together, over the past three years, we
have done just that, and next month we expect to reach a milestone: half a billion
dollars in net savings, from ingenuity and reforms, across state government.

Priorities

This commonwealth is the sixth-largest
economy in the United States. And we’ll be running at full strength as long as
we concentrate on three priorities, a great education for every child, a
private sector where every business large and small can grow and hire, and a
healthcare and human services system where everyone has choices and everyone is
covered.

Education

Let’s begin with education. Every child in
this state should be, ready to learn…ready to grow, ready to succeed, and my budget
sets an agenda in that spirit.

Education is the largest single item in my
budget. The increase I propose would bring direct state support of public
education to $10.1 billion, more than 40 percent of state spending.

That reflects additional money we’ve
devoted to our schools during my time as governor, which comes to almost $1.55
billion.

Early in my administration, of course, we
were faced with the problem of the vanishing federal stimulus money. It had
been used to pay for education, and when it was gone there was nothing left in
the General Fund to fill the gap. But with every great challenge also comes
great opportunity.

We have a responsibility to give the
children of this state a 21st Century education, and over the past three years
we have worked every day with thousands of parents, teachers and administrators
from across this state to ensure that we drive each and every dollar into
education that meets the needs of the children of Pennsylvania.

Through targeted initiatives, we have
worked to increase accountability and transparency in our schools, infused
stronger educational resources into our classrooms and focused financial
resources on supporting students at all levels. This budget will continue to
support these strong reforms.

Each of our 3,000 schools now has a School
Performance Profile, so that parents and communities have all the basic facts.
If a school has problems that are setting children back, that’s something
parents and communities need to know.

And when everything is going right in a
school, and students are doing great, we want to know that, too, so the best
can become the standard for the whole state.

As former teachers, my wife, Sue and I have
been visiting schools all across the commonwealth. It’s been an uplifting experience, to return
to the kids and the classrooms and feel the enthusiasm in our schools.

We are pleased to have with us today,
Representatives from one of the schools that has received an Excellence in
Education Award. Students, Amira Ellison and

Hoang Le along with their teacher, Judd
Pittman, and their principal, Marisol Craig, from Harrisburg’s Math Science
Academy, welcome, and congratulations on your achievement.

We have worked to strengthen teacher
evaluations to ensure great teachers in every classroom, and improved testing
that better measures what a student is learning. These improvements are a
result of collaboration with and input from superintendents, administrators and
teachers. Our goal was to listen to - and benefit from - the experts in
education so we could put the best methods into practice.

As we increase education spending, we are
making certain that more of that money goes where it will do the most good, directly
to our kids.

At every level, from Early Childhood to
high school and beyond, every dollar we spend is an investment in the future of
our commonwealth. Because of these strong reforms, I am pleased to announce
today the next phase of my Ready to Learn education agenda, which includes
strategic investments at all levels of education.

This budget starts with our youngest,
investing an additional $10 million

in Pre-K Counts to allow more 3- and
4-year-olds to enter high quality early learning programs. This funding,
combined with the recent $51 million we were awarded in the federal Race to the
Top grant for early learning, means that Pennsylvania will continue to provide
some of the best early childhood education programs in the nation.

For K-through-12, I am excited to announce
the Ready to Learn Block Grant, $241 million in funding for school districts
that focuses on student achievement and academic success.

It builds upon the strength of the
Accountability Block Grant created many years ago by Speaker Sam Smith, bringing
the total Ready to Learn dollars available for districts to $341 million in
this budget.

This block grant is designed to ensure that
every child is reading and doing math at grade level by the third grade, that
students are getting the grounding they need in science and technology, and
that a school is flexible enough to give tailored instruction to students who
need it.

This block grant includes $1 million in
targeted grants to help struggling schools meet their potential. The most
obvious way is to link up with the top schools in a mentoring partnership, to
gain from their experience and knowledge. These grants will make those
school-to-school connections possible.

In order to embrace new, and customized,
methods of learning, this budget will invest $10 million into the Pennsylvania
Hybrid Learning Grant Fund. Ask our teachers, and many will tell you that
hybrid learning produces great results and engages the interest of children and
helps them to excel.

Of course, every school should always be a
welcoming place for children with special needs, just as our whole state should
be. School districts have not seen an increase in special education funding in
six years. In this budget, I am proposing an increase of $20 million in special
education funding, to make sure that every child has a chance to succeed.

As we focus on early childhood and K-12, we
also need to ensure that once our children graduate, they are prepared not only
to enter the workforce, but also to achieve post-secondary learning
opportunities on their journey to a career.

We all know post-secondary degrees are
costly and sometimes out of reach as students and their families worry about
debt. With this budget, we will launch
the Ready to Succeed Scholarship program, which will provide an additional $25
million for middle income students who want to earn a two- or four-year degree.

The grants would go directly to
academically achieving students who otherwise may not be able to attain enough
financial aid. To further support our students, I present a challenge to all
post-secondary institutions across Pennsylvania, join with me in holding the
line on student debt. I urge these schools to match the grants. Let's give every Pennsylvania student a great
start.

Whether students are looking at
trade school or college, a little help at the right time can make a world of
difference. And it’ll make our state even more attractive to businesses
considering whether to move or expand here.

They’ll want to know if Pennsylvania has
prepared our young adults in the trades and disciplines that are always in
demand. And our answer will be YES.

Jobs

Another critical priority of this budget,
after investing in our students, is creating jobs for our citizens, creating as
many jobs as possible right here in Pennsylvania.

If you make job creation the test for most
every policy, you’ll never go wrong. When it came to business taxes, all I
needed to know was that they were costing people jobs. The General Assembly
agreed. So over the past three years, we have reduced the tax burden on
Pennsylvanians by a billion dollars and our workers are better off for it. And
we’re pressing on with more tax relief this year, by continuing the phase out
of the capital stock and franchise tax.

Since 2011, we’ve come together to make
some wise investments, with long-term payoffs in productivity and quality of
life. So, let’s make a few more. And if we stay focused on that same defining
goal – jobs for our people – it will see us through.

We have so much going for us in
Pennsylvania. I meet a lot of people in business who are scouting around for
new locations to build or expand. I always point out that if location matters,
they’re not going to do any better than our state. I tell them that 60 percent
of the population of North America lives within a long day’s drive of the
Keystone State. I remind them of our tremendous energy resources, which have
driven down energy costs for homes and businesses. And I tell them that if they
are looking for the finest workforce in America, their search is over – it’s
right here in Pennsylvania.

In all of these ways, my budget plays to
our strengths. This budget invests more than $450 million for job training for
Pennsylvanians -- to make our workforce even better, and to sharpen our state’s
competitive edge. We should also invest more in the effort to draw new
companies here, and to win back the ones that have left.

Every time we have a chance to tell the
world that Pennsylvania is a great place to live and do business, we
should. It’s time well spent. And as our economy gets stronger, the message
only gets more persuasive, and more businesses will come. To companies across
this country and the world, we speak as one: Come here, and make it in
Pennsylvania.

Healthy
Pennsylvania

Now and then, we make decisions in this
building that carry consequences far beyond the years we will spend here.
That’s when we need to do our clearest thinking. Health care in Pennsylvania is
that kind of issue, and here’s where matters stand.

As the federal government has asserted more
authority over health care in recent years, Pennsylvania has showed caution. We
know a great deal about health care policy in this state. We have a history of
bipartisan reform to prove it.

The Children’s Health Insurance Program now
reaches across the country, and the first state to put CHIP into law was
Pennsylvania. We’ve kept it strong, too. And when we saw children having to
wait six months before their coverage would start, we got rid of that
requirement. Because our children come first.

In the same way, we’ve tried to protect
physicians from the excesses of trial lawyers. In some cases, even a doctor’s
expression of sympathy or regret about a patient’s condition was being offered
as evidence of malpractice. That was an abuse of our legal system. We should be
strengthening a patients’ relationship with their doctor and not putting
barriers between them. So we put an end to that too.

While things get sorted out in Washington,
here in Harrisburg we’ve been at work on a program called Healthy Pennsylvania.
It will make the most of the buying power of our state government.

It will take full advantage of competitive
pricing in the free market. The program will bring more doctors into
under-served communities, and bring specialists to remote areas through
telemedicine.

When we are done, Healthy Pennsylvania will
put high-quality, private-sector health insurance within reach of all our
citizens, whatever their means. This is the solution

we have chosen for ourselves. The
alternative is to let Washington, with its usual one-size-fits-all mindset, make our
choices.

Their approach would send a half-million
currently uninsured Pennsylvanians into Medicaid, with no other option. Our
approach would provide those same citizens with the kind of affordable, private
health coverage that working people all over this state receive through their
employers.

Instead of a restrictive entitlement
program, Healthy Pennsylvania will give these individuals and families more
choices and independence, encourage healthy behavior, and deliver better care
at less cost to the taxpayers. It will also save the commonwealth more than
$125 million this year alone.

To make good on this promise, all we need
is a waiver from Washington. We’ll do
the rest. Pennsylvania will provide access to health insurance where it
is needed most, we’ll do it right, and we’ll do it best.

Investing
in People

The smartest investments we make are the
ones we make in people. We’re committed to helping those who need it most. My
budget is a reflection of this commitment. It will help secure a brighter
future for our seniors, our neighbors with disabilities, our victims of violent
crime, and our veterans.

As many of you know, Pennsylvania is home
to a growing senior population. Our seniors deserve our best care. To make certain
they receive the help they need. This
budget will invest $23.5 million to protect and expand services for nearly
3,300 older Pennsylvanians.

But we are not stopping there.

We have the chance to continue to improve
the lives of our friends and neighbors with disabilities, individuals whose
strength and courage have become a constant source of inspiration to me. For far too long, these people had to wait
for services they and their families so desperately needed. But last year, our
increased investments helped reduce that waiting list.

Just last week, I visited the Kroc Center
where those with disabilities are able to work and lead fulfilling lives in the
community. I saw the commitment of a community to make people’s lives better. I
know how important that commitment is, and so do you.

We need to create a Pennsylvania where
people with disabilities, and their families, will never be forced to wait for
services again.

This year, we will work to further reduce
those waiting lists with an additional $41.5 million to provide home and
community-based options for people with disabilities and autism spectrum
disorders.

The budget I propose to you today also
helps guarantee victims of violent crime will not be forced to go through such
a devastating experience alone. With a 10 percent increase in funding for
Pennsylvania’s domestic violence and Rape Crisis programs, we will keep our
commitment to provide the services necessary to victims of domestic violence
and sexual assault.

To honor and care for those who have served
in uniform, last year we established the Veterans’ Trust Fund. This fund supports
Pennsylvania veterans and their families and includes help for veterans in need
of shelter and living necessities. The
sacrifice of our veterans requires more.
In this budget, I propose an additional $1 million to honor our
ever-expanding veteran’s population. It
is our duty to continue to support those who have served us so bravely.

Liquor
Privatization and Pension Reform

Along with the priorities of this budget,
we have unfinished business we must address.

First, we have to reform our antiquated
system of state-owned liquor stores. Visitors often wonder about it – unless
they’re from Utah.

Our own people don’t think much of the
system, either, because it’s inconvenient and they don’t appreciate paying
monopoly prices. About the only ones who do like it are the stores in New
Jersey, Delaware, and Maryland that pick up the extra business.

Pennsylvania loses about $80 million a year
that would otherwise be spent here. So here’s a thought, let’s make 2014 ‘last call’ for state-controlled
liquor in Pennsylvania.

A crucial reform that would provide the
state with even more to invest in the future of our children is pension
reform.

Three years ago, the commonwealth’s pension
debt was a 42 billion dollar problem.

Today, it is a 50 billion dollar problem
that continues to drive local property taxes up. This problem consumes more
than 60 cents of every dollar of new revenue.

In fact, this year, we can expect to pay
about $1.5 billion in pension costs for state and school district workers. In
just a few short years, that number is expected to grow to more than $4
billion.

You heard that right, I said $4 billion -
with a “B”.

When I was before this assembly last year,
I proposed a comprehensive solution to our pension problem. My plan did not touch the benefits of
retirees, nor did it touch the benefits that current employees have already
earned. Debate ensued but no solution was agreed upon.

Since that time, some in this room have put
forth their own pension reform plans. They see the need to do something; the
importance of solving the problem.

I ask you to work with me in the coming
months to find a solution. We must fix
this. Those who say there is no pension problem are misinformed. They are in denial.

Billions in new debt to our state is the
cost of doing nothing. The only question is whether we will do it now, when
it’s still a manageable problem, or let others do it later, when it’s an
all-out crisis.

So many good things that we achieve can be
undone by uncontrolled debt and our increasing pension costs. The basic reform
package in my budget this year will save this state and local school districts
a combined $300 million.

Inaction is unwise in the extreme, and
deeply unfair to our children, communities and schools.

Again, I urge, help your state. Help your school districts. Help your
taxpayers. Enact public pension reform
before the end of this session.

Conclusion

When it comes to our state and our ability
to meet great challenges, I have

great confidence in the people of
Pennsylvania. We’ve seen our way through some fairly tough times.

And with some notable successes in this
building lately, we have shown what

we are capable of doing. These are the
kinds of successes that usually last

the longest in government work done with common
purpose by both parties,

in the public’s interest.

Things are coming together. All around us
are the hopeful signs of a stronger

Pennsylvania. We have work to do, and
commitments to honor. And now we have

a way forward with the budget I submit
today, a budget reflecting real numbers,

responsible choices, and unlimited
confidence in what our people can accomplish.

I have no doubt that you will give your
full effort and nothing less. You can be sure that I will do the same. This
year, together, let’s give our best for the future of this great commonwealth.
Let’s build a stronger Pennsylvania.